This happens often.
You’re looking to book flight tickets online. You make the mistake of not purchasing them right away and *boom* a couple of days or sometimes hours later, the prices have gone up.
Altering prices based on demand or customers is a common strategy that several businesses use to drive sales or maximize profits.
In e-commerce, this is officially known as dynamic pricing.
What Is Dynamic Pricing?
A concept that’s been around for a while. Dynamic pricing is when the price of a product or service is adjusted (increased or decreased) for a specific period of time to meet demand or to influence a purchase.
The price of the product could be changed temporarily for various reasons – it could be hiked up during the holiday season. Or lowered to move out slow-moving inventory. Or could be personalized for wholesale buyers or business partners.
With dynamic pricing, you can set the best price for your offering to maximize your profit.
How Can Dynamic Pricing Benefit Your WooCommerce Store?
E-commerce giants like Amazon, airline ticket booking sites, and popular hotels are known to implement dynamic pricing on a regular basis. That’s because the advantage of dynamic pricing is the opportunity to increase sales.
Along with this, there are several underlying benefits, such as:
- Increased Purchase Urgency: You can convince potential buyers to make purchases quicker with limited time offers. If the price is dropped momentarily then the urgency to make the purchase increases.
- Marketing Opportunity: Change in prices can be marketed to your target audience to lure them into making a purchase. You can also use this to coax customers into becoming members.
- Customer Loyalty: By setting special prices for customers, you can make them feel special and keep them coming back to your store; thus, increasing loyalty.
- Product Highlighting: By altering prices of certain products or product categories you can bring them into focus. This can primarily help you clear out stagnant inventory.
- Price Personalization: Prices set for customers or certain user roles or groups can be used to offer buyers a personalized shopping experience.
Dynamic pricing allows you to have more control over the pricing of your product. Changes in pricing can be managed effectively without having a negative impact on your brand.
How to Implement Dynamic Pricing on WooCommerce?
There are several dynamic pricing extensions available to help you implement and control this strategy on your WooCommerce store. Using one or a combination of these extensions you can set flexible pricing in several ways. For example:
1. User-Based Pricing
With this strategy prices are set per user. This could be setting a different cost for the same product for guest buyers or setting personalized prices per customer. This works when you have a few products in your e-store.
However, dynamic pricing extensions also allow you to set prices for multiple products and customers at once using price import options.
For example, product A costs $30 for guest buyers. $20 for customer XYZ. $10 for customer JKL.
2. Advanced Category Pricing
Percentage price discounts can be set for an entire category. However, with an advanced strategy, special discounts can be set per customer for a category. This strategy works particularly well to clear out slow-moving inventory.
For example, product category A is available at a 10% discount for customer XYZ.
3. Role-Based Pricing
With role-based pricing, you can create a sort of membership store wherein customers have greater cost-saving benefits as they move up the membership ladder.
You can set different price discounts for different roles. This can also be implemented if you want to club vendor partners into a single role and offer them special discounts.
For example, all products at 10% OFF for Shop Managers.
4. Quantity-Based Pricing
Specifically for wholesale buyers, this strategy can also be put into place for regular customers to coax them into making a higher-quantity purchase. By setting increasingly higher discounts for bulk orders, you can give customers a benefit for purchasing in bulk.
For example, get 1 x product A at $30. 5 x product A at $20 (each). 10 x product A at $10 (each).
5. Dynamic Cart Discounts
When a customer adds a product to the cart, you can push them to increase their order value by offering them a special price or discount on crossing a certain cart value limit. This can drive them to purchase more products in the lure of better savings.
For example, let’s say a customer has products worth $90 in their cart. You can offer a 10% savings upon reaching a cart value of $100.
6. Demand-Driven Pricing
Holiday seasons are a great time when you see an increase in product demand. For example, the price of airline tickets or hotel rooms increases as the demand goes up. Setting prices in such scenarios can help you stretch your profit margins.
Quite simply put, dynamic pricing is a strategy that can drive success to any business.
What’s important is to figure out the most suitable option for your products or services and your customer base. Having the right plugin gives you the flexibility to implement either of the above strategies to help you boost returns. Be sure to keep tracking your competitor prices so as to maintain rates as per your industry standards.
What do you think of the strategies discussed? Is there a particular one that you’d like to try? Whether it’s a single strategy or multiple combined, it’s time to take the plunge and implement dynamic pricing on your WooCommerce store, right away!